The End of Poverty Part 6

THE END OF POVERTY

HOW WE CAN MAKE IT HAPPEN IN OUR LIFE TIME

JEFFREY SACHS

PENGUIN BOOKS              2005

PART VI

Chapter 5: Bolivia’s High-Altitude Hyperinflation

Chapter 6: Poland’s Return to Europe

Chapter 7: Reaping the Whirlwind: Russia’s Struggle for normalcy

Chapter 8: China: Catching Up After Half a Millennium

Chapter 9: India’s Market Reforms

Chapter 10: The Voiceless Dying: Africa and Disease

• A decade of work in Africa has taught me a considerable amount about extreme poverty, the power and limits of globalization, and the indomitable strength of the human spirit in the face of adversity.
• An intensive decade of economic advising from 1985 to 1995 taught me something of the art of differential diagnosis, so I could better appreciate how Africa’s development crisis reflected the interactions of history, geography, domestic policies, and geopolitics.
• These interactions had left Africa stuck in a poverty trap. Worse, as of the mid-1990s, Africa was careening headlong into an HIV/AIDS pandemic, one of the most ferocious disease contagions in history.

 

LOOK WHO’S LECTURING WHOM ON GOVERNANCE

The outside world has pat answers concerning Africa’s prolonged crisis. Everything comes back, again and again, to corruption and misrule. Western officials, including the countless “missions” of the IMF and World Bank to African countries, argue that Africa simply needs to behave itself better, to allow market forces to operate without interference by corrupt rulers. An American talk show host, Bill O’Reilly, reflected a common view when he recently declared that Africa “is a corrupt continent; it’s a continent in chaos. We can’t deliver a lot of our systems that we send there. Money is stolen. Now when you have a situation like that, where governments don’t really perform consistently, where there’s just corruption everywhere, how can you cut through that?”

Western governments enforced draconian budget policies in Africa during the1980s and 1990s. The IMF and World Bank virtually ran the economic policies of the debt-ridden continent, recommending regimens of budgetary belt tightening known technically as structural adjustment programs. These programs had little scientific merit and produced even fewer results. By the start of the 21^st century Africa was poorer than during the late 1960s, when the IMF and World Bank had first arrived on the African scene, with disease, population growth, and environmental degradation spiraling out of control.

When it comes to charges of bad governance, the West should be a bit more circumspect. Little surpasses the western world in the cruelty and depredations that it has long imposed on Africa. Three centuries of slave trade, from around 1500 to the early 1800s, were followed by a century of brutal colonial rule. Far from lifting Africa economically, the colonial era left Africa bereft of educated citizens and leaders, basic infrastructure, and public health facilities. The borders of the newly independent states followed the arbitrary lines of the former empires, dividing ethnic groups, ecosystems, watersheds, and resource deposits in arbitrary ways.

As soon as the colonial period ended, Africa became a pawn in the cold war. Western cold warriors, and the operatives in the CIA and counterpart agencies in Europe, opposed African leaders who preached nationalism, sought aid from the Soviet Union, or demanded better terms on Western investments in African minerals and energy deposits. In 1960, as a demonstration of Western approaches to African independence, CIA and Belgian operatives assassinated the charismatic first prime minister of the Congo, Patrice Lumumba, and installed the tyrant Mobutu Sese Seko in his stead. In the 1980s, the United States supported Jonas Savimbi in his violent insurrection against the government of Angola, on the grounds that Savimbi was an anticommunist, when in fact he was a violent and corrupt thug. The United States long backed the South African apartheid regime, and gave tacit support as that regime armed the violent Renamo insurrectionists in neighboring Mozambique. The CIA had its hand in the violent overthrow of President Kwame Nkrumah of Ghana in 1966. Indeed, almost every African political crisis – Sudan, Somalia, and a host of others – has a long history of Western meddling among its many causes.

The one thing that the west would not do, however, was invest in long-term African economic development. The die was cast in the 1960s, when senior U.S. policy makers decided that the United States would not support a Marshall Plan type of policy for Africa, even though such an effort was precisely what was needed to build the infrastructure for long term growth. It was not that U.S. officials rejected the diagnosis – they knew it was needed – but the political leadership was not willing to pay the price.

In April 1965, the director of the Central Intelligence Agency submitted a National Intelligence Estimate on the “Problems and Prospects in Sub-Saharan Africa.” The estimate accurately concluded the following about Africa’s growth prospects:

Economic growth in most areas will be very slow; indeed, setbacks are probable in a number of countries. There is a desperate shortage of virtually all kinds of technical and managerial skills; indeed, the basic institutions and staff for economic development are often inadequate or absent. Moreover, it is highly unlikely that most African countries will obtain external assistance or investment on anything approaching the scale required for sustained economic development.

As a National Security Council staffer noted in June 1965 in briefing McGeorge Bundy, President Lyndon Johnson’s special assistant for national security affairs, the president’s mandate to the State Department “cautions that substantial increases in U.S. foreign assistance expenditures to Africa are not envisaged.”

DEEPER CAUSES OF AFRICAN POVERTY

Both the critics of African governance and the critics of Western violence and meddling have it wrong. Politics, at the end of the day, simply cannot explain Africa’s prolonged economic crisis. The claim that Africa’s corruption is the basic source of the problem does not withstand practical experience or serious scrutiny. During the past decade I witnessed close at hand how relatively well-governed countries in Africa, such as Ghana, Malawi, Mali, and Senegal, failed to prosper, whereas societies in Asia, Indonesia, and Pakistan, enjoyed rapid economic growth. Table 1 compares the Transparency International “corruption perception” rank for these African and Asian countries and their respective economic growth rates. We see that African countries lag behind in economic growth even when they are perceived to be less corrupt than their Asian counterparts. Using formal statistical tests, it turns out that Africa’s per capita economic growth is significantly lower, by around 3 percentage points per year, than in other developing countries with comparable levels of corruption and income.

At the same time, Africa’s harsh colonial legacy and the West’s very real depradations in the postcolonial period also do not explain the long-term development crisis. Other regions of the world that are now growing rapidly also experienced severe damage from decades or centuries of colonial rule and postcolonial meddling. Vietnam is a case in point, a country that had to fight for independence for decades and yet emerged from that brutal experience to achieve very rapid economic growth.

In sub-Saharan Africa, therefore, a good differential diagnosis is urgently needed. The political story lines of both the left and the right reflect platitudes and prejudices, with little explanatory power about economic development. I was intent on finding a better approach. My work in Africa has been both an intellectual as well as a human adventure, and I think the effort has paid off in helping to uncover some of the deeper roots of Africa’s predicament, as well as some promising solutions. 

FIRST ENCOUNTERS

From my first drive across the border from Zimbabwe into Zambia, and during innumerable visits since, what has impressed me most is the distinctive physical ecology, and how it has helped to shape Africa’s recent economic history. The great biologist E.O. Wilson is correct, I believe, when he argues that human beings are “hard-wired” to feel a special resonance (“biophilia”) with the African savannah, the place where our species arose some 150,000 years ago. Yet however captivating these savannahs are, they pose innumerable and unique challenges for modern economic development: disease, drought, and distance from world markets, to name just three. Adam Smith, I noted earlier, had already pointed out the third of this trilogy in The Wealth of Nations, when he observed in 1776 that Africa had been poor from time immemorial because it lacked the navigable rivers and natural inlets that afford the benefits of low-cost, sea-based trade.

• I was in the Bank of Zambia on the second or third day after my arrival, when my colleague from Harvard University explained to me that a Zambian coworker in the financial reform project had recently died. “How old was he?” I asked. “Oh, our age.” “But why?” “AIDS, Jeff. AIDS.”
• This project was meant to be “capacity building,” but Zambia was clearly losing trained capacity much faster than it was being gained.
• AIDS was not alone in its devastating impact on African society. Soon I became vividly aware of another insidious killer: malaria.
• Everyone’s children – rich and poor alike – contracted malaria. And all risked grave complications.
• Never, not even in the highlands of Bolivia, where illness is rife, had I confronted so much illness and death. India had never evoked the same sense of death in the air.
• By the turn of the new millennium, sub-Saharan Africa’s life expectancy stood at 47 years, more than two decades lower than in East Asia (69 years) and 31 years lower than the average age in developed countries (78 years).
• The worldwide map of life expectancy in map 8 highlights Africa’s unique and extraordinary situation.
• According to economic historian Angus Maddison, Africa’s growth rate has been among the lowest of any world region during each major subperiod since 1820. That includes a long stretch before Africa fell to European colonial rule in the 1880s and the period since independence. Could the exceptional burden of illness be a significant reason?
• Although predatory governance can soundly trounce economic development, good governance and market reforms are not sufficient to guarantee growth if the country is in a poverty trap.
• Botswana, Ethiopia, Ghana, Malawi, Mozambique, Nigeria (under President Olusegun Obasanjo), Senegal, Tanzania, Uganda, to name just a few, all have better governance than might have been expected given the burdens of extreme poverty, illiteracy, lack of financial resources, massive debt overhang, AIDS, malaria, and repeated droughts.
• In all these cases, but especially in the landlocked countries (which number a whopping 15 in Africa, by far the most of any continent), free-trade zones would not suffice, nor would they relieve extreme poverty on any kind of realistic timetable.
• To understand – and overcome – such crises, it would be necessary to unravel the interconnection between extreme poverty, rampant disease, unstable and harsh climate conditions, high transport costs, chronic hunger, and inadequate food production.
• My first foray into this complex mix was via disease – mainly AIDS and malaria – which I began to study in detail in 1997. More recently, especially in the context of the UN Millennium Project, I have also focused my attention on the issues of infrastructure and increased food production.

 

The malaria mystery